Determinants of deposits volatility: The case of the microfinance sector in gabon

Microfinance shows a tendency to seek profitability by increasingly neglecting its social objective. This paper seeks to enrich the debate on the explanation of such a duality by analyzing the determinants of deposit volatility taking Gabon as a field of investigation whose microfinance sector is particularly dominated by short-term deposits. Using the 2014-2020 period from a fully modified least squares model, we find that deposit volatility is influenced in the short term by inflation and in the long term by the business cycle and governance. These results have important implications in terms of poverty reduction in Gabon where microfinance can play a crucial role.

Automated summary

This paper enriches the debate on the dual nature of microfinance and its pursuit of profitability over social objectives. Through analyzing the determinants of deposit volatility in Gabon, it finds that inflation affects deposit volatility in the short term, while the business cycle and governance have long-term impacts. These findings have important implications for poverty reduction in Gabon where microfinance can play a crucial role.